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Penny Wise, Billions Foolish

Saving pennies on material costs often makes sense in high volume products, but could cost Takata up to $24 billion.

Whether a clean sheet design or an incremental improvement, materials are always a variable – and sometimes the only variable – for engineers to achieve the desired product performance. The criticality of properly vetting this decision cannot be over stressed – just ask Takata Corporation who is behind the auto industry’s biggest recall ever. A recent article published on Bloomberg estimates the worst-case recall cost of the company’s airbag inflators at 2.7 trillion yen or $24 billion USD. Reading the story, I couldn’t help but wonder about the root cause of the failure and whether engineers accounted for that failure mode during initial vetting of the design. What business goal or pressure lead to the design choices resulting in the product configuration produced in 287.5 million units worldwide?

While a definitive root cause of the failure has yet to be published, a Car and Driver article identifies one factor from independent tests of the Takata design as the use of phase-stabilized ammonium nitrate material without an accompanying desiccant. High absolute humidity over time can cause the propellant to break down causing excessive pressure when deployed, rupturing the Takata airbag inflators. Another article on Car and Driver describes testimony given by Takata executive vice president Kevin Kennedy before a hearing with the U.S. House Energy and Commerce Committee stating that Takata is the only manufacturer using ammonium nitrate but it wasn’t done to cut costs.

Regardless of the reasons, the engineering lesson here is that there are broader implications to the materials selected for use in products. How those choices are vetted can lead to recall risks costing the company billions of dollars as with Takata or even save companies tens of thousands in testing costs. The following YouTube video provides an example for airbags:

In the video, you can clearly see the crystal propellant used in the inflator, giving you an appreciation for technical aspects of the Takata recall. At 2:40 in time line, the video starts to describe performance characteristics required of airbags and how computer simulations can expedite analysis and reduce testing expense. In the video, John Cooper of Breed Technologies estimates the facilities cost for one crash test at 10,000 British pounds or $15,000 USD. Adding in vehicle cost and manpower can easily double or triple this figure while the computer simulations of only a few pounds or dollars come in at a fraction of the cost.

Application of new materials can lead to break through innovations, but could also have dramatic impact. Properly vetting materials requires not just understanding the material itself, but how that material will function over time in its intended environment. Choose wisely, and you fuel a leapfrog technology. Choose poorly, and you could end up being a warning to others – like Takata.

What type of vetting does your company do for the materials used in your products? Tell us about your quest for unconventional knowledge and what it could mean for the future of your products or companies. Share your thoughts in the comments section below and don’t forget to follow us on your favorite social media channel.